Its biggest challenge was finding a way to provide current order information to customers on different continents and multiple time zones away.
Nordson manufacturers dispensing systems and markets its products through direct operations in 31 countries. More than 50 percent of its $731 million in annual sales is generated outside the United States; however, 14 of its manufacturing plants are within U.S. borders, far from some of its largest customers.
In response to the problems posed by its far-flung customer base, Nordson decided to increase its online presence with eNordson.com. The project began when it integrated its 19 manufacturing operations with an enterprise resource planning system (ERP) in March 2000. The goal was straightforward -- make it easier for customers to do business with Nordson.
Cynthia Skelton-Becker, director of engineering in Nordson's powder systems group, was charged with heading up eNordson.com. Skelton-Becker says that at that time, start-up dot coms were everywhere, but there weren't many industrial e-commerce sites to benchmark.
After implementing a basic brochure online, Nordson installed a survey on the site allow customers to comment on its usefulness and track hits and traffic to new functions on the site as they were added.
Skelton-Becker says she discovered customers wanted to know exactly when to expect their order. The didn't want to find out today that their order shipped yesterday, "particularly in these days of just-in-time purchasing." Tracking on the site revealed customers wanted real-time ship dates and shipment tracking data once their order left the Nordson dock.
"What the Web site is letting us do is give the customer control of the information they need," Skelton-Becker says.
Staffing the customer service and shipping departments 24 hours a day wasn't an option, but linking its manufacturing operations to an e-commerce system and providing real-time connectivity to customers was.
"Ed Campbell (president and CEO at Nordson) told me a lot of companies were concentrating on purchasing (functions by) Web-enabling internal operations," Skelton-Becker says. "He wanted us to use the technology to enhance the customers' access to Nordson, so we focused on a customer front-end system."
Skelton-Becker says eNordson.com wanted to make it easier for customers, not add an extra step in the order process.
"A manufacturer's first reactions are, 'We'll put this e-commerce site out there and people will put their orders in for us. Won't that be handy?'" she says.
However, feedback indicated that only a small subset of customers wanted to place orders online. Most had programs that sent orders automatically via fax when they entered orders in their system, so online product ordering ability was not the customers' main concern.
The next step will be all about service as well. The idea is for Nordson to track a customer's equipment and provide proactive servicing.
"If you can track the number of hours a piece of equipment is used, then you know when to send a service person out to help the customer," says Skelton-Becker.
Skelton-Becker says Nordson continues to look for ways to build efficiencies for its customers.
"These ideas aren't new," she says. "What's new is the tools." How to reach: Nordson Corp., (440) 985-4000
"You don't need to try and convince people there's a problem," he explains.
Berg is a health and welfare practice leader with Towers Perrin, a global management and human resource consulting firm with 9,000 employees in 23 countries. He says Cleveland is fortunate to have one of the most successful small employers' purchasing groups in the country, the Council of Smaller Enterprises (COSE).
Statistics indicate coalition purchasing is growing, and smaller employers are five times more likely to participate in a coalition-based purchasing program than they were just a few years ago.
The reason? Double-digit increases in the cost of health care, with no end in sight. Health insurance premium increases averaged between 11 and 14 percent for 2001, and experts predict another increase next year of between 12 and 15 percent. That has small and large employers alike concerned.
Cleveland-based accounting firm Cohen & Co. was hit with a 36 percent increase in its cost for insurance coverage. For Cohen, health care benefits are a way to attract and retain employees, and up until this year, it paid 100 percent of its employees' premiums and a portion for family coverage.
So when Cohen decided to pass a small portion of premium costs on to its employees, it was a decision not make lightly. Mary Kay Wagner, manager of HR and administration, says what made the decision more palatable to employees was the amount of time the company spent designing a reasonable plan and hosting seminars to help employees better understand their options.
George Statlander, vice president of underwriting at Medical Mutual, believes the crisis of sky-high insurance premiums will pass with the advent of new innovations.
"I think we're going to go through a cycle (of higher premiums)," he says.
Statlander predicts a migration of doctors from larger health care systems into more entrepreneurial initiatives, creating greater competition in the marketplace. That, he says, will drive premiums back down.
A survey conducted by Towers Perrin indicates the most popular method of reducing costs is a change in prescription drug programs; approximately 65 percent of companies surveyed took this route. Forty-one percent changed plan design and implemented cost-sharing features. Others increased co-pay amounts and co-insurance arrangements.
"Drugs represent anywhere from 20 to 25 percent of total health care costs," says Berg.
A decade ago, prescriptions accounted for 6 to 8 percent of total costs. Because of compounded interest, a rise in overall costs equates to a much higher increase in the portion for medicine.
Also, Berg says coalition purchasing can lower prescription drug costs up to 5 percent.
"And when that's representing 25 percent of your total health care costs ... that can be a fairly significant impact," he says.
Robert Baker, president and CEO of the University Health System Consortium, says drugs costs are not expected to decline in the near future.
The consortium, with headquarters in Chicago, works with approximately 90 university hospitals and physician staffs nationwide. Its mission is to help hospitals manage costs and compete in the marketplace. Contrary to a common belief, Baker says physician reimbursement and hospital reimbursement have remained fairly static over the last decade. However, nursing and other critical health profession labor costs have risen significantly.
Another way to combat rising insurance costs is through plan consolidation. Forty-nine percent of employers now offer five or fewer health plan choices to their employees, an increase from 43 percent in previous years.
One of the more controversial ideas for helping businesses weather booming prices is a defined contribution plan, in which employers provide a specific amount of money monthly to employees for health care. It is up to the employee to invest it, shop for the best value in health plans or bank the money.
Berg says if the company's objective is to avoid fluctuations in insurance costs, a defined contribution plan may be the answer. If a business is looking to recruit and keep employees, it's important to first understand how a benefits program factors into retention, recruiting and employee motivation.
Know your objectives, Berg says, because they will determine whether this is an option for your company.
"If you have a bunch of young, single people, this would work very well," he says.
But long-term employees with families may consider it less of a benefit and more of a restriction.
Joseph LaGuardia, regional vice president of Anthem Blue Cross and Blue Shield, favors shifting more responsibility onto the consumer. He says matching a benefits plan to the specific demographics of each company and promoting a proactive approach is one option. Anthem's new tag line, "Decide to be Healthy," is a sign of that commitment.
"The individual has got to take more control of their health care, their eating habits and the way they live their life," LaGuardia says.
The last few years have been tricky because economic growth and a tight labor market made it difficult for employers to shift health care costs to employees. But that is changing, and business owners are looking for way to rein in costs.
"I really do think the patient needs to make some choices," says Statlander. "That means if they're going to be responsible, they need to be financially responsible as well as personally responsible for the choices they make."
Cost-sharing options, he says, are important incentives.
Joe Cerino, president of Bedford-based Har Adhesives, absorbed a good portion of his company's health care cost increases in the past, but then premiums went up 20 percent each of the last two years.
No matter what the options are, one thing is certain: things are changing and employers must adapt.
"I've got to go shopping now," Cerino says. "I owe that to my employees and to myself." Deborah Garofalo is associate editor of SBN Magazine.
Highland Heights is part of 292 distressed areas in Ohio designated in need of economic development and employment. To be eligible for federal contracting opportunities through the HUBZone program, a company must be located in this type of historically underutilized business zone.
The company must also be wholly owned and managed by U.S. citizens and 35 percent of its workforce must live within the HUBZone county.
Once qualified, the business owner works with the U.S. Small Business Administration to receive certification and a listing in SBA's Pro-Net data.
Along with more than $2 billion in potential contracts, the advantages of participation are that companies compete with other HUBZone organizations and receive a 10 percent price preference when competing against outside suppliers.
Cleveland-based General Metal Heat Treating Inc. recently became certified and Deborah Dougherty, vice president of administration and finance, says she anticipates it will increase the company's customer base. General Metal is a heat treating company that works primarily with first tier contractors in the aircraft arena. End users are such industry players as Boeing Aircraft and Bell Helicopter.
"I don't believe it will be a make or break decision for us," she says. "Obviously, it's up to us to market it. But it is something we can put in our tool box to make us that more marketable."
Northeast Ohio HUBZone counties include Lorain, Huron, Summit, Cuyahoga, Stark, Mahoning, Trumbull, Lake and Ashtabula.
And, although the application for participation may seem cumbersome, filing can be done electronically as well as on paper. Currently, there are 129 HUBZone certified small businesses in Ohio.
How to reach:U.S. Small Business Administration's Cleveland District Office, (216) 522-4180
Despite this, when the topic of conversation turns to business or politics, Forbes, who is better known as Steve, quickly roars to life.
The media mogul joined his father's empire, Forbes Inc., in 1971 as a researcher. By 1973 he was writing columns. When his father died in 1980, Forbes assumed the company reins as president and CEO. Today, he is rumored to be worth more than $435 million and is heir to approximately $1.4 billion.
While Forbes is well-known for his exorbitant spending during his failed presidential bid in 1996, he's also well-respected for his depth of expertise in business. SBN Magazine sat down with Forbes during a recent visit to Akron University to talk economics, publishing and business.
As recently as last year, Forbes has had the highest revenue of any magazine in America. How has that changed in recent months?
Obviously, 2001 was a much different year than 2000 with the collapse of the dot-coms and telecom companies. It was a tough year. After Sept. 11th, it really slowed. People decided to save cash, sit on budgets and wait and see what happens early next year. I believe things will recover in spring, but between here and there it will be a challenging for a lot of companies.
Is it a smart strategy for companies to continue with their advertising, sales and marketing efforts?
Yes. I'm self-interested, but there's a good objective case to be made. But when the economic storm clouds are gathering, it's pretty easy for businesses to look at that as a way to conserve cash. It's short term and somewhat short-sided, but very tempting.
What about the economy, itself?
If I really could predict it, I wouldn't have to work for a living. Clearly, the contraction will continue. It's going to be sluggish, (but) I think you'll start to see an uptake in the spring. The question is, from what base? Two things have hurt. One is that the Federal Reserve still hasn't pumped sufficient equity into the economy.
It's lowered interest rates, but it hasn't made money available. The key is to set the foundations for recovery next year. Second, Congress has to pass a good, strong, muscular tax cut and make the rate cuts effective across the board now, not five years or 10 years from now.
Many have said technology advances will force a nosedive and the newspaper with our morning coffee will be gone. What does the future look like for the publishing industry?
There have been contractions (and) job eliminations. Several magazines, including Mademoiselle, have bit the dust. I don't think industry magazines, newspapers or journalism has gone through anything like this in several decades. But we won't get rid of magazines or newspapers. The nice thing about paper is that it's very easy to meet the desires of your own reading habits. If you want to flip to a page, you can. You don't have to press anything. The ease and the flexibility will ensure that there will be a market for it.
Just as TV didn't destroy radio, just as TV didn't destroy the movies, so too the Net's not going to destroy the printed page. Often, when you go on the Net now, you go for specific information. If something's of any length, you usually print it out. And, even though I think they'll make screens even clearer than they are now, it's still not the same as having a piece a paper.
What advice would you share for companies trying to recover from the aftermath of Sept. 11th?
A lot depends on the industry you're in. But the key thing is to make sure you survive by reducing expenses and making sure you have sufficient cash flow. You may have to shop around with some banks and lenders because they're under pressure to cut back. But look ahead and say, 'Alright, these things don't last forever. What are our opportunities as things start to turn.'
Cleveland and Akron are very heavily manufacturing oriented. Any advice specific to manufacturers?
Manufacturing is clearly value added. We can't compete with the rest of the world just in making things that everyone else can. Chipmakers have shown it's not the commodity chips you make, it's having what you might call the designer chips, the advanced architecture. The same is true in manufacturing.
Ford Motor Co., got in trouble not because Japan makes a car cheaper, but because of problems they had in bringing out new products and maintaining quality levels. GM has paid a little more attention to those things and, for the first time in memory, is gaining market share in the U.S. market.
Manufacturing has always been value added. Akron and Cleveland have demonstrated in the last 20 years, when the tire business first disappeared and everyone thought that the rust belt truly was gone, that it wasn't. The economy changed and the economy came back. If you have the ability to adapt to change and get that value added, then this area should do fine.
Also, it's important to adapt technology to manufacturing and become more efficient. The lumber business has machinery and technology that can more easily tell you what you have in your inventories and what you're getting out of the mill. It cuts down the handling and the storage time. It's not just technology; it's what you use it for.
Many people have criticized NAFTA, saying it's going to hurt our country, weaken the economy and steal our jobs. Do you agree?
NAFTA reduces barriers to do business with other countries. It has ended up creating jobs in Canada, United States and Mexico. The volume of trade has increased enormously, going both ways on the borders. Are there sources of friction? Sure. Consider Canada and the lumber business. But that's always been true.
Clearly, it's been a roaring success in terms of job creation, even though in certain industries and companies it has posed unique challenges.
Is there any country you see as a potentially good trading partner for the United States?
Russia. Russia's had terrible problems, largely of their own making, such as the international monetary fund (fiasco). They haven't established the rule of law there or a commercial code so you can do business. It's been very arbitrary, very difficult, very corrupt and very ridden with local gangsters.
But I think Putin is, at least initially, starting to make some headway against those obstacles. Also, I hope Russia becomes a major oil producer. I'd like to have a source of oil other than the Middle East.
What do you think is Cleveland's greatest asset?
I think getting the Browns revived, even though they test the loyalty of their fans, certainly was good. And perhaps next year the Indians will go a little further than they did this year. But I think the key thing is for the new mayor to sit down and put herself in the shoes of a business person and say, what are the obstacles to somebody who wants to do business in this area?
There are probably tax obstacles and regulatory problems. Then, when you see what creates opportunity, when you see what has helped other cities grow, you can take the necessary measures.
During a recession, while it poses some immediate problems, it also provides opportunities. People are going to be looking at where they can do business (and) break past habits. This is the time to get the name of Cleveland out there.
Are you considering running for office again?
I've no plans to do so, so I'll be agitating from the sidelines. I think the President really made himself, not just in fact, but in spirit, the Commander-in-chief with the message he gave to Congress on September 20th. After the horrible events, I think the man realized this was his moment, this was his mission, and I think you see a very different president than you did before Sept. 11th. He's risen to the occasion, provided the leadership and I am very impressed.
"I'm much more interested in people who are not looking for a new job," says Tim O'Brien, president of O'Brien & Company, a Cleveland-based retained executive search firm.
O'Brien captured many large and small contracts since founding the company in 1988. Current clients include Abbott Labs, American Greetings and Ernst & Young.
O'Brien & Company is a retained search firm. Recruiters can be retained or contingency based. O'Brien explains that a contingency firm sells the skills of an individual to a company, collecting a fee once that person is placed. A retained search organization works on behalf of clients to research the market, identify, validate and screen potential executives. The biggest difference is, one seeks jobs and the other seeks top level managers.
So before you dismiss a recruiter's call as an interruption, ask a few questions. If they are from a retained firm, your experience, skills and education have matched up with an executive level position waiting to be filled and a window of possibilities has opened.
Whether or not you are in the market for change, it's wise to look at your options, so understand what the recruiter is looking for and perhaps you can help them find it in you.
Integrity, trustworthiness and straightforwardness
A recruiter knows a lot about you before he or she ever makes the initial contact. Even your first, more casual conversation is definitely not a time for stretching the truth or exaggerating details. Good or bad, speak the truth to gain trust.
Problem solving skills and creativity
"We like people who are creative, that is, they're not emulators, they look for new, workable solutions to problems," says O'Brien, adding that people with get-up-and-go need no prodding - they run with the ball.
Personal and professional accomplishment, achievement and balance
Personal achievement is as important as professional, O'Brien says. It can be as simple as mastering the violin or writing a newsletter for a nonprofit organization. It is an important indication that a person has a well-balanced life, and in turn, can offer well-rounded leadership.
Anyone can be on a board but not any one can tackle a problem and come out on top Keep a mental running note of the problems you've encountered and the solutions you've implemented.
O'Brien points out that there is typically a correlation between those who are successful in the world of commerce, accumulating a healthy financial status, and those who have a history of making the right choices.
While there's no need to flash your portfolio, don't hesitate to answer financial questions. The recruiter is not just looking for free investment advice.
Affiable, mannerly and engaging
"I look for people who have a good appearance, who meet well, who have good manners...they look you in the eye and they're engaging," says O'Brien.
In turn, people who believe in themselves spread a contagious enthusiasm and an atmosphere that attracts other successful people. Be cognitive of the aurora you create.
The last thing you want to do is buddy-up to executive recruiters. To most good search firms, friendship stays out of the search equation.
"Contribution is the key word," says O'Brien. "Make a significant contribution to the organization you're working for. The more you do that, the more you're preparing yourself for bigger and better things."
How to reach: O'Brien & Company, (216) 575-1212
But businesses that want to help their community and their employees' hometowns still find a way to make a difference. SBN Magazine investigated the philanthropic philosophy of area businesses and found that no two companies are exactly alike.
Ernie Novak, managing partner Cleveland, Ernst & Young LLP
Philanthropy is sort of like the chicken and the egg comparison. The challenge is volunteers can serve meals, but someone has to pay for the food.
One common thread connects volunteerism and financial support -- the human spirit of giving back to help those in need around us. People have followed their hearts, which has led them to get involved and to donate. I wouldn't want to see people choose between these two activities because they are so closely intertwined.
Financial support is important, and our employees give to literally hundreds of charitable organizations throughout Northeast Ohio. But in addition, our people are encouraged to volunteer their most precious asset -- their time. Money talks ... but volunteers walk the talk through their personal commitment of time.
We believe so strongly in that, that beginning their first week of employment, new staff participates in what we call Community Service Night. Recently, 61 new hires volunteered at the Eliza Jennings Home and the Ronald McDonald House. We even created a database to keep track of who's doing what in volunteer commitments.
With a work force of more than 900 people in Northeast Ohio, we believe we can make a big difference. We all gain when we help the community where we live.
Mary Karr, director of community relations, NCR
We do not separate the various sides of giving. At NCR, we have three prongs to our community relations -- senior management placement on boards, philanthropic investments and employee volunteerism.
Globally, we have 32,900 employees, so we keep track of the number of hours our employees volunteer and the programs they are in to give us a feel for the range of activities we as a corporation are involved in. It could be as simple as volunteering at their child's school or being a scout leader. Last year, our employees volunteered 58,591 hours of their time. That's up from 1999 when it totaled 55,892 hours.
As far as financial giving, we target communities that have 1,000 or more NCR employees and do a needs assessment. Then we come up with a program to help civilly, in the arts and culture, with health and human services as well as education.
But almost everything we do is done through volunteerism, including the United Way campaign and the United Arts campaign. We support the Dayton Culture Works, a united arts fund that is the single largest funder for arts in the area.
NCR runs two campaigns per year, one for the arts and one for health and humans services. We say that one is for the heart and one is for the soul.
Doug Weintraub, president, Centerprise Information Solutions
Most of the people at our six locations donate time and sit on the boards of nonprofit organizations. Whatever community employees live in, they volunteer in. Given this current economic situation, we typically volunteer time and get personally active in nonprofits.
Because we're a consulting firm with expertise in accounting and computers, we understand that's our expertise, our niche. We can help many of the associations out there by being on the boards or volunteering.
Steve Millard, executive director, COSE
COSE was built on the tradition of volunteering leadership. Today, we have over 460 active volunteers in our community, on boards and working on events. We may not have a single person who's been here as long as COSE has been in existence, 30 years, but we have a ton of volunteers who have.
We have small business owners who simply volunteer to field questions from other business owners. They give advice and help in the area of their expertise. Our members spend their time helping each other, and for people just starting out, being a recipient of that volunteerism is very important
Jim Kandrac, president, United Computer Group Inc.
I prefer volunteerism, giving of yourself through your time and your help. But time is not always easy to find. As a company, we tend to lean toward financial support because we are more readily able to do so.
Pero Novak, president, Air Technical
We lean toward financial contributions like to the United Way. This year, we also made a big effort to help with the World Trade Center Fund. We also collected items needed by the Red Cross like soap, hats and blankets. We had a tremendous reception and participation for the victims.
Our employees want to help; they want to do something for their community. Although it's inconvenient as a manufacturing operation to stop running and to call everyone together to decide what we will support, we do it. And our employees are generous as long as they believe in the cause.
Craig Kurz, CEO, Honey Baked Ham Co.
We take the approach of giving financial gifts and product gifts. We've had multiple shipments of food for the relief and rescue efforts in Washington, D.C., because we have a store there. Also, we set up a program to give a percentage of our sales from all of our retail stores to the Red Cross. In 19 days, we raised $53,000.
But outside the realm of the September tragedy, all of our stores are encouraged to choose local charities and causes. And again, we give food to soup kitchens and churches and food baskets to the needy around the holidays.
We have 21 stores in Ohio. We tell our store managers to tap into those people closest to your stores, meet the needs of your community, and we'll support you at the corporate level. We like to say we think national, but we act local. What I mean is, we are very much connected with our local trade areas and the very different needs of each community.
Corporately, we always support ALS, arterial lateral sclerosis, also known as Lou Gehrig's disease. It's our designated national charity because my grandfather, who founded Honey Baked Ham Co., passed away in 1974 from ALS. We primarily support them with financial gifts from the company as well as from individual employees.
What we want people to do is feel passion and believe in the causes they support, and those are the causes closest to their stores. How to reach: Honey Baked Ham Co., (800) 394-4424; Air Technical Industries, (440) 951-5191; COSE, www.cose.org; Centerprise Information Solutions, www.wecansolve.com; Ernst & Young, www.ey.com; United Computer Group, www.ucgrp.com; NCR Corp., www3.ncr.com
Deborah Garofalo (email@example.com) is associate editor of SBN Magazine.
And she's not the only one. This combination of a telephone conference with a Web presentation controlled by a host is quickly catching on.
"It was like a Power Point presentation on your PC that you have no control of," says Wigglesworth. "You could say to the host, 'I missed that slide,' or 'Help me understand this,' and they can actually go back and walk you through it."
The 10-person meeting required no travel or special equipment, just Internet access.
Ameritech, a subsidiary of SBC Communications Inc., promotes audioconferencing through an 800 number as an inexpensive communications solutions. Penny-pinching is becoming the norm for businesses of every size, but maintaining communication both internally and with customers remains critical.
Ameritech spokesperson Mike Marker says the number of inquiries about video services has increased 400 percent since the Sept. 11 attacks.
"These businesses are clearly taking a look at travel expenses and creatively using that type of product to cut back," he says.
A lack of discretionary spending and a fear of traveling are forcing companies to get more out of existing products. Does this mean Internet service providers are giving up on selling high-tech products? Not exactly. In fact, SBC Ameritech began actively marketing its DSL (digital subscriber line) to mid-sized clients in January.
Wigglesworth admits DSL deployment is slow. Ameritech guarantees a certain processing speed, but unless digital lines are within a specified range from a central office, speed is an issue.
"Many times, when a small business customer contacts us and we look to see if DSL is available in their area, it's not yet there," says Wigglesworth.
That's disheartening, considering SBC Ameritech, with its parent company, SBC Communications Inc., is one of the largest DSL providers in the nation. Marker says it comes down to money; major markets are getting more attention because the number of customers is higher in those areas. For businesses in outlying areas, that means a long wait for service.
Marker cites an Arthur Andersen national small business survey that indicates 50 percent of companies feel hosting a Web site is the most significant obstacle between them and e-commerce. To remove that obstacle for its clients, Ameritech will begin Web hosting next year.
"I can see many of our small business clients taking advantage of that because they don't have the infrastructure to maintain their own Web site," says Wigglesworth.
Ameritech's Web hosting will include tech support, Web creation and maintenance.
With so companies taking the low road back to basics, Virgil Pund, vice president for Small Business Services at Ameritech, offers suggestions on how to get the most from your existing telecommunications services:
* Sign up for bundled services rather than individual services to get discounts.
* Unclog your phone network by using individual extensions.
* Take advantage of conference calling.
* Consider outsourcing Web site services.
* Maintain customer communication during an electrical outage or natural disaster by using a provider-backed phone system.
* Take advantage of DSL for connections up to 100 times faster than a modem.
* Eliminate redundancy in simultaneous use of pagers and cell phones. How to reach: SBC Ameritech, (800) 660-3000
Deborah Garofalo (firstname.lastname@example.org) is associate editor of SBN Magazine.
Many Clevelanders ask themselves what needs to be done to move our economy away from traditional manufacturing and industrial and into high tech and bio tech. That's the issue Robert Atkinson, Ph.D., of the Progressive Policy Institute of Washington, D.C., and Paul Gottlieb, Ph.D., of Case Western Reserve University's Center for Regional Economic Issues, tackled when they developed The Metropolitan New Economy Index.
To educate federal, state and local policymakers about the characteristics of the New Economy, Atkinson and Gottlieb analyzed 50 metropolitan regions to rank some of the major drivers in the economic success of a city.
This is how Cleveland stacks up against its peers.
Fundamental in determining a region's success is its ability to attract, develop and retain knowledge workers. Large metro areas will prosper if workers are employed in knowledge- and information-based jobs.
Ranking is this area can be determined by the share of the work force employed in managerial, professional and technical positions, and the education level of those employees.
The top five cities in this category are Washington, D.C., Denver, Minneapolis, Austin and Raleigh-Durham. Cleveland ranks No. 19.
A region's ability to conduct business globally is vital, and the only indicator of a region's ability to sell to and service the world is foreign exports.
In 1995, the world's economic output was $4 trillion; by 2000, it had jumped to $21 trillion.
The top five cities in this category are Seattle, Miami, Richmond, San Francisco and Houston. Cleveland ranks No. 34, behind Pittsburgh (32), Philadelphia (20), Indianapolis (18) and Cincinnati (15).
The rejuvenation of a region through the formation of innovative companies is a key determinate of economic vitally.
This dynamism is manifested in fast-growing, entrepreneurial companies. Indicators in this area are the percentage of jobs in gazelle (rapidly growing) firms, the degree of job churning and the value of local IPOs.
The top five dynamic cities are San Francisco, Las Vegas, Orlando, Denver and Seattle. Cleveland ranks No. 38, with Cincinnati, Columbus, Dayton, Pittsburgh, Detroit and Rochester bringing up the rear.
The presence of rapidly growing firms known as gazelles indicates a dynamic and adaptive economy.
Between 1994 and 1998, gazelles generated approximately as many jobs (10.7 million) as the entire U.S. economy (11.1 million).
The key indicator in this category is an annual sales revenue growth of 20 percent over four consecutive years.
The five cities with the most gazelle jobs are Orlando, Las Vegas, Charlotte, San Francisco and Phoenix. Cleveland placed in the 26th to 50th percentile.
In a digital economy, virtually all economic transactions are conducted via electronic means. The indicators include the percentage of adults online, the number of commercial Internet domain names, the percentage of children with classroom computers, the Internet backbone structure and the number of broadband telecommunications providers.
The top five cities in the digital economy are San Francisco, Austin, San Diego, Washington, D.C., and Denver. Cleveland ranked in the 1st to 25th percentile.
Innovation capacity stems from increases in knowledge and innovation and their widespread adoption.
Indicators of innovation include the number of high-tech industry jobs, degrees granted in science and engineering, the number of patents, the amount of academic research and development funding, and the amount of venture capital invested.
The top five cities in innovation capacity are Raleigh-Durham, San Francisco, Austin, Boston and Rochester. Cleveland ranked in 26th to 50th percentile. How to reach: Case Western Reserve University, (216) 368-5534; The Progressive Policy Institute, (202) 547-0001
In 1986, Farah Walters walked through the doors of University Hospitals of Cleveland to interview for the position of director of nutrition services. She was intimately familiar with the Cleveland-based hospital system after delivering her daughter at UH's MacDonald Women's Hospital and receiving follow-up care at Rainbow Babies and Children's Hospital.
Because of those experiences, Walters had come to the sobering conclusion that health care had become an impenetrable maze of paperwork and referrals. And, with her typical candor, she told the interviewing panel, "This is what I feel is wrong."
She briefly outlined what she thought would make patients' experiences easier during the most difficult times of their lives. The outspokenness didn't hurt her chances; Walters was awarded the job.
The mid-'80s was a time of change for health care in Northeast Ohio and nationwide. Employers looked for financial relief and began passing insurance premium costs on to employees. Managed care organizations were in a growth phase and building critical mass by negotiating lower rates with providers. But that relief was never fully realized as the national economy slid into recession.
It was during this time, in 1992, as the escalating tension leveled, that Walters stepped into the lead role at University Hospitals of Cleveland and University Hospitals Health System as CEO and president. She was the first woman to lead the 135-year-old institution and the first woman in the United States to head an independent academic medical center.
The task was daunting. Teaching hospitals nationwide were being cut to the core because of a disproportionate number of uninsured patients, high costs associated with academic research and nonrevenue generating physician training. Many were forced to look for merger opportunities, cut expenditures with layoffs or balance the books by slashing less lucrative programs.
UHHS, however, weathered the storm. Under Walters' leadership, the hospital system grew from a traditional, single-site academic medical center into a formidable contender of the world-renowned Cleveland Clinic. UHHS established recognized centers of excellence in its Rainbow Babies and Children's Hospital, the Ireland Cancer Center and MacDonald Women's Hospital, the only women's hospital in Ohio. And over the past decade, nearly $500 million has been invested into new programs, staff, buildings and enterprising initiatives.
Today, the UHHS family includes a dozen acquired and partner hospitals, 150 locations and insurance and managed care companies with revenue exceeding $2 billion.
But the changes at UHHS have also generated controversy as Cleveland moves ever closer toward an oligopoly, with two major health care systems muscling out smaller players at the starting gate.
Walters disagrees with the proverbial two-horse race theory described by some health care experts.
"If you're two businesses operating in the same city, fighting for the same market share, yes, there is going to be some competition," she says.
Whichever side of the equation you're on, one thing is certain. It is because of Walters and her vision for how health care should be delivered to patients that UHHS has achieved its current level of success. She maintains strong beliefs about the impetus behind the health care revolution and refuses to rest upon her laurels.
She says her focus is on determining what new reforms the hospital can incorporate. Simply put, she is on a mission to develop creative solutions to combat the igniting health care costs that threaten Greater Cleveland.
Tehran-born Farah Moavenzadeh arrived in the United States in 1964 speaking little English and for one purpose -- her parents wanted her to receive a top-notch education. She, however, saw things differently and had her own goal -- to go back home.
Struggling with a new culture and language, Moavenzadeh was the only female physics major at The Ohio State University. The pressure almost took its toll on the teen-ager. She turned to her brother, a college professor who was also Stateside, for support.
Physics soon changed to preventive medicine as the hospital atmosphere appealed to Walters even then. Although more clearly focused as she walked the rounds with medical students, Walters still longed to return to Tehran. Then she met Steve Walters, a law student from Elyria, who in 1970 became her husband.
That same year, she became a U.S. citizen and moved to Cleveland to assume the post of education director at what is now MetroHealth Community Hospital. She later obtained a master's degree in nutrition and an MBA from Case Western Reserve University's Weatherhead School of Management, studying health care at the macro level.
In 1987, she moved into the position of senior vice president at UHHS under her predecessor, James Block. By the time she stepped into the president's role in 1992, Walters had gained experience in research, patient care and administration.
"By shear chance, not by design, I put together this background that has served me very well," she says.
Walters' office on the first floor of the Lakeside Building is a professional yet feminine reflection of her style. She chooses to remain at the heart of the daily bustle, just a few yards from the main entrance and within easy reach of patients, physicians and employees.
Being accessible is part of her vision, which has thus far yielded success for UHHS and recognition for its leader. Among her honors, in 1998 Walters was the first woman to receive the Harvard Business School Club of Northeast Ohio's Business Statesmanship Award, and in 1999, she received the Sales & Marketing Executives of Cleveland's Business Executive of the Year Award. This year, she received the Ellis Island Medal of Honor by NECO, the largest U.S. organization promoting ethnic and religious equality.
Walters believes the heart of the hospital's success lies in its teamwork approach, but the bottom line is that no organization can be successful without a strong leader. It is directly because of her rise through the ranks that Walters fosters a unique sensitivity to employees and patients alike, bringing a patient-centric philosophy to the business of care.
"If I had to do this 10 more times, I would not change a thing in my background," Walters maintains. "It has given me such an insight, not only into what goes on at the clinical bedside level, but what goes on in the business side."
Walters' vision led to a 1993 appointment to then-first lady Hillary Rodham Clinton's National Health Care Reform Task Force. That bird's-eye view of the nation's health care woes ignited programs at UHHS that made it a role model for university hospitals nationwide.
In 1994, Walters was again called upon for her expertise. Ohio Gov. George Voinovich asked her to participate in a 15-member commission to study the Ohio economy and tax structure. As her education in health care continued, Walters carved out a niche in business as well as the business of caring.
There is little question that health care is indeed a business, and with $1 trillion in revenue, it is among the largest industry sectors nationwide. But what makes it unique also makes it vulnerable -- health care touches everyone involved on a very personal level. Explains Walters, "You have to do it right the first time; there is not opportunity for recall."
UHHS generates approximately $1.7 billion a year. That's a far cry from when Walters arrived at what was then a single-site academic medical center. Under her leadership, UHHS has become a vast network of alliances, partnerships and strategic acquisitions.
Robert Baker, president and CEO of the University Health System Consortium, says the hospital system's outreach through community hospitals and physician offices is significant in that it promotes economic buying practices, volume buying and a sharing of management expertise. In other words, it fosters an environment that is conducive to cutting expenses.
"Overall, your health care delivery system is going to be more effective," says Baker, "both in terms of patient care services and costs because of all the economies of scale."
Reform began in 1993 with Walters' strategic plan to take health care into the communities where people live and work. She says the plan is a continuation of her predecessor's, although until she added her touch, the plan emphasized single-site acute care. She also drove complexity from the system. Redundancies in care and reams of paperwork added to the hard costs of delivering health care.
Armed with bedside experiences and a working knowledge of the gears within the health system, her plan would prove pivotal in her career. Her goal was to predict how people would want to access health care at the turn of the century and build it into UHHS.
"The way we developed not only our strategic plan but strategic alliances was really driven by focusing on what our patients and their families want," Walters says. "We looked at health care and said, 'Let's design it not the way it was done in the past, which was completely illogical and a response to reimbursement policies. Let's look at it in terms of how the consumers of health care want to use health care.'"
In UHHS' 1999 Report to the Community, Walters wrote: "In redefining ourselves, we established a clear understanding that we are in the health care business -- not exclusively the hospital business." It is a statement she has manifested in her decisions since.
During the five years following her appointment, the number of UHHS' primary care and ambulatory care locations grew from 16 to 100. The health care system's presence expanded from 11 communities to 45 across 14 counties. The number of outpatient visits increased from 1.4 million to 3.1 million. The hospitals' reach now extends from the Pennsylvania border to Sandusky, and as far south as Medina, Summit and Stark counties.
The burning question today is how this massive expansion has impacted the cost of health care.
A recent employer health insurance survey by the Robert Wood Johnson Foundation analyzed the cost of employer-sponsored health coverage in Greater Cleveland. It found an average 1.1 percent increase in 1997 compared to the double-digit increases in the late 1980s and early '90s. From that perspective, cost containment efforts by Walters and UHHS, as well as other private and public forces, appear successful.
But as any employer today knows, premium rate hikes in the double digits are more the norm than the exception.
Sitting on the receiving side of medical bills is Medical Mutual vice president of underwriting George Statlander, who disagrees that costs have been reined in. He says UHHS' expansion into a broad-based health care system contributes to today's rising rates.
"All we need to do is drive along the interstates of any major city and you'll see new ambulatory, surgery, outpatient clinics and medical office building complexes going up," says Statlander. "This program of capital expansion needs to be paid for by the consumers, whether they be in the private or public sector."
Scott Lyon, executive director of Group Benefits Inc. at COSE, agrees.
"There's a lot of different things that go into it ... general inflation, aging population, prescription drug prices ... the absolute demand for the latest, greatest things," says Lyon. "And consolidation of the health care market is a contributing factor."
Lyon questions whether it would be better to chip away at the millions of uninsured rather than provide the "Mercedes Benz of health care to everybody that has it at the expense of everybody that doesn't."
But Walters shrugs aside such views and remains steadfast in her belief that the strategic plan is healthy and serves patient needs at an affordable rate. With an ear to the consumer, she says the most recurring complaint heard before the plan was put into effect was that patients felt they were being bounced from one provider to another. Cost, she says, was not their primary concern.
"Sometimes it was done in continuity of care," Walters explains. "Sometimes there was information that was falling through the cracks, and sometimes there were redundancies and delays in the system."
More important, Walters recognized a different role for hospitals in the future. She envisioned the need for outpatient services and doctor visits. Her solution was to forge alliances and partnerships and establish a wide network of caregivers.
Statlander argues the process hurt rather than helped local health care.
"There has been erosion in our ability to leverage competition between these systems (The Clinic and UH) to result in lower prices," he says. "We don't have the ability to negotiate that we had a while ago."
That's not a surprising opinion, considering the mission of insurers is to keep costs down across the board. But Joseph LaGuardia, regional vice president of Anthem Blue Cross and Blue Shield of Cleveland, is not nearly as critical of UHHS' method of growth.
"I think it fuels other businesses because of what goes on in the two major systems," says LaGuardia. "In a way, it is highly competitive between these two major systems. That is a good thing because it promotes excellence and innovation."
Innovation, says Walters, is crucial to the long-range success of UHHS. Her commitment goes back to when she was senior vice president and created the managed care company QualChoice in the late '80s.
The impetus, she says, was that UHHS employees were not exempt from the cost increases associated with health care. Walters received a good dose of reality in 1987 when she inherited responsibility for the hospital's self-funded employee health insurance and increases were averaging 27 percent annually.
"That was really an eye-opener and what we were facing and was being faced by all other businesses," she says.
Baker says it was Walters who recognized the problem and approached it with a creative solution.
"Costs were escalating at a dramatic level," he says. "The business community was clamoring for a new alternative that would help control costs. Basically, Farah and her staff said they understood what the business community was asking for."
Another innovation was the enhancement of UHHS' alignment with one of the most prestigious academic medical schools in the United States, Case Western Reserve University. The relationship provides UHHS access to cutting edge technology at a research level.
Research has been a part of UHHS for decades. This spring, the hospital broke ground for what may be its biggest investment yet, a $10 million, 320,000-square-foot building dedicated to clinical research. The building is due for completion in 2003.
But, as any business leader knows, high tech does not necessarily yield high success. That, Walters says, comes from developing a plan and following through.
"We developed a strategic plan in 1993 that committed to understanding that not only the market of health care was changing, but more important, the needs and the wants of the consumers of health care was changing," she says.
And, at a time when other teaching hospitals were bleeding money, scaling back services and choking on the 1997 Balanced Budget Act, UHHS expanded. Today, the organization -- which includes its partner hospitals -- is the largest private-sector employer in Northeast Ohio, moving up from fifth place in 1996, with a physician-employee work force of 25,000.
Baker attributes the growth directly to Walters.
"She has, first of all, a way about her that looks at care from a patient's point of view," he says. "It's one thing to be able to have a vision of what needs to happen in an organization. It's another thing to be able to execute on that vision within an extremely complex organization."
Part of her success can be attributed to Walters' 1993 experience in the Washington, D.C., circle. She says it afforded her an in-depth review of health care changes at the national level, and the strategic plan developed for UHHS was a key result of that knowledge.
By sharing that knowledge with UHHS' board of directors, Walters says, "They were very quick to understand that even though the strategic plan had an element of risk in it, the bigger risk was associated with not doing anything. What made it doable was that people understood why we had to do this."
Since becoming president and CEO in 1992, Walters has fostered an atmosphere for the development and recognition of team-driven successes. She always comes back to "we."
"We means the senior management team, we means the clinical leadership, and we means thousands of employees that come here every day," she says. "We could have the best strategy, the best execution of that strategy, but it requires employees."
Staff appreciation is really a two-way street to success, she says.
"We cannot expect our employees to provide the best care to our patients and be caring, compassionate, responsive, sensitive if we treat them with lack of respect, lack of interest and so forth," she says.
An example is when Walters addressed the nursing shortage that threatened the quality of care by developing a short-term and long-term plan. For the short-term, the hospital actively recruits retired nurses, offering a cost-free refresher program developed in conjunction with Cleveland State University. Nonprofessional employees interested in entering the health field are also offered tuition reimbursement.
The long-term strategy includes developing interest in health professions such as nursing by creating programs with local school districts for middle school through high school. Walters is also attempting to reach the root of the problem by investing time and money to understand what leads the organization's nurses to dissatisfaction on the job.
"What we're trying to do is to really let them know they are critical to the work we do, they are valued, their contributions are respected, they're central to our patients' satisfaction and to good patient outcome," she says.
To understand the factors interfering with the staff's ability to produce the best outcome for patients, UHHS is formulating a questionnaire for employees, physicians and residents.
"Throwing money at the problem is not the answer," Walters says. "They (the health care staff) need to feel fulfilled. They need to feel what they do is important, is recognized and is respected."
And, as health care pundits predict a shift toward prevention rather than cures for a patient base that demands adaptability, Walters is listening and reacting. She is developing a program called "E-Health," which stands for electronic health communications, which will allow appointments to be scheduled online, lab reports to be transmitted over the Internet and patients to submit questions to UHHS physicians via a Web site.
For providers, the initiative will allow for a faster review of medical records and dramatically increase the efficiency of patient management. Today, paperwork accounts for almost 20 percent of health care costs, and Walters says E-Health is expected to drive that figure down.
As she goes down her path of continuous improvement, she says technology will play a major role.
"We're focusing very heavily in the area of supply chain management and how we can improve our position," she says. "But ultimately, our business is about people."
How to reach: University Hospital Health System, (216) 844-1000
In April, Swiger, director of education and operations for Complient Corp., was three hours into a cross-country flight when he heard yelling and turned to see a panicked woman in the aisle holding a limp toddler.
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